Video is becoming a bigger and bigger part of companies' marketing spend. Many companies have already taken the plunge.
Some heard about video's massive potential, got excited about the future, and dove right in. Others saw their competitors getting on board and decided to produce their own video content to stay relevant.
As incredible as commercial video can be, the "new car smell" – that initial excitement about branching out into a new medium – can wear off after a few months without one key thing:
A provable return on investment.
Why Video ROI Matters
Commercial video's exploding popularity is enough to convince plenty of businesses to give it a try…
But it's not enough to justify heavy investment over a prolonged period of time.
What measurable impact do video campaigns have on the business' overall goals?
How does video stack up versus other marketing tactics?
Measuring video ROI will help you convince more clients to embrace video because you'll be able to show them which initiatives are working, which could be improved, and how they to invest their money effectively into the future.
1. Get Clear on Your Goals
Every business wants people to view their videos and use them to strengthen relationships…
But to get an accurate measure of your ROI, you need to get much more specific.
Trying to define a comprehensive objective for all of your videos can be overwhelming because video can be used for so many different applications – demos, explainer videos, customer support, and many more.
It's easier to drill down your objectives and examine them at the individual campaign level.
Without a clear goal, it's impossible to measure success. You'll never know what's “working” and what you could improve.
To identify your goal for each campaign, answer the following question:
What specific action do you want someone to take after viewing the video?
Common goals include:
• Lead generation
• Lead nurturing
• Building customer loyalty
Each video produced is usually just a small piece of a larger conversion funnel (which incorporates blogging, social media, email marketing, etc.) The better you can pinpoint each video's place in the funnel and its specific objective, the easier it is to track ROI.
2. Connect Each Goal to Measurable Benchmarks
Once you understand the goal for each, it's time to link those goals to key performance benchmarks.
Benchmarks are: 1) measurable, 2) easy to understand, and 3) closely related to the underlying goal. Using benchmarks is essential because they serve as metrics of how well (or how poorly) each video is accomplishing its goal.
A goal to "raise awareness," for instance, is admirable but impossible to measure. Using benchmarks, like social shares or average viewing time, make it easier to understand how well the video hits the mark.
If you can, limit yourself to one or maybe a couple of key benchmarks related to the campaign goal. Trying to track and interpret too many metrics gets overwhelming quickly and can muddle your ROI measurement.
Here are a few benchmarks you could use to measure different goals:
- Awareness: number of views, percentage of viewers who watched the explainer video on your homepage all the way through, etc.
- Engagement: percentage of completed video plays, average viewing length, referral traffic to your website, shares on social media, comments
- Lead generation: number of sign-ups to a mailing list, number of downloads of a report, white paper, etc. after viewing the video
- Lead nurturing: number of requests for an initial consultation, product demo, or free trial sign-ups
- Sales: revenue attributable to video views
- Building customer loyalty: number of customer support emails, number of unresolved customer support tickets, social shares
3. Choose the Right Frame of Reference
Now that you know what to measure, it's time to figure out how.
As you'll see in just a second, there are a wealth of analytics platforms available to help you do this. But measurement alone isn't as valuable as it could be without a frame of reference to give your results a context that makes sense and guides future decisions.
There are three basic frameworks how you can “look at” video ROI:
- Absolute ROI: this framework is the most straightforward. What result does spending $X on the video create? Say you're running a lead-generation campaign with your new video. It costs $1,000 to produce and nets 75 white paper downloads (your key benchmark). Each lead cost $13.33 to acquire. If your average customer lifetime value is $20, it's easy to see the video was a profitable investment.
- Relative ROI: relative ROI is a little more nuanced in that it compares how well a video performs with your other marketing strategies. If you spent the same amount of money required to create the video on another strategy (like PPC text ads or social media ads), which strategy resulted in the best results? You'll probably find that certain strategies perform better depending on the goal.
- Attribution Modeling ROI. the most complex way to look at ROI, where you measure the impact of each marketing initiative (search, display, social, print, video) on the overall results in a comprehensive way. This is becoming more possible as things move digitally and different analytics platforms integrate, but it's still incredibly complex. Check out this great article from Harvard Business Review to find out more.
There's no need to into relative ROI or attribution modeling right away, as those can get complicated in a hurry. Start with a framework you can manage (usually a combination of absolute and relative ROI, depending on the campaign goal). Your ROI calculations can always get more complicated and nuanced with experience.
Now that you understand what you're tracking and how to interpret the results, how will you collect the information?
There are plenty of video analytics tools available which give you far more information than just total number of views.
One popular tool is YouTube Analytics, a free way to analyze how viewers interact with videos you host on YouTube. If you're hosting your own videos, Google Analytics is another option because it allows you to measure complex behavior and set up conversion goals. And plenty of third-party platforms offer built-in analytics capabilities if you use them to host your videos.
Analytics tools give you information like:
- Number of views: the original measure of success with online video. Still can be a valuable indicator of the attractiveness of your overall video and the power of your distribution. This breaks down into total views, paid views, organic views.
- Length of plays/completed plays: how people are viewing your video. 2 million views is great, but not so great if 95% of visitors click away 10 seconds into a 3-minute video. Analytics platforms reveal how many viewers watched to the end and average viewing length, as well as key drop-off spots.
- Demographics: measures how well viewers match your target market; which devices they watch video on, what time of day do they typically interact with them.
- Engagement: helps measure how much of an effect the video has. Track things like social shares, likes, comments, and sign-ups to your mailing list.
Ultimately, the tool you use will probably depend on where you decide to host and/or distribute your video content.
5. Track, Experiment, and Optimize
Once you have a video campaign launched and analytics in place, it's time to track the results.
Is the video accomplishing its goal?
Are things going better or worse than you expected?
Tracking these things over time is the only way to know for sure. Besides justifying each video's expense, the data will also provide fertile inspiration for new ideas to experiment and test.
Say you notice that viewership drops off sharply about halfway through a video. This just so happens to be the time when you introduced a certain graphic. What if you removed that graphic or swapped it for something else? There might be a straightforward way to drive more engagement.
You can always split-test slightly different versions of your videos, as well as video versus other marketing initiatives. They won't all be big winners, but tracking and testing will make every video you produce as valuable as possible.
Justify Your Place as an Invaluable Business Asset
Commercial video is trendy, but proven results are always in style.
How well is each campaign advancing your goals?
Focusing on not just the quality and quantity of videos produced, but the results they deliver will justify long-term investment and solidify your place as a valuable business asset.